10 4: Reducing Inventory Shrinkage Business LibreTexts


10 4: Reducing Inventory Shrinkage Business LibreTexts

Inventory Shrinkage in Retail: 4 Tips to Prevent It

If one employee makes a mistake, plenty more follow up behind to catch it and make sure, for example, that a part was replaced at a certain milestone. Get in touch with Flowspace today to learn more about inventory management solutions. As mentioned earlier, theft can affect your bottom line drastically; with more than 400 million incidents of shoplifting per year, it’s a serious issue that you need to arm your business against. Here are some of the ways you can prepare your business for shoplifters and deter them from taking your goods.

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You should also reevaluate employee hiring practices to ensure you’re hiring honest and trustworthy employees. Also, improve your workplace culture to discourage dishonest behavior. Regular training on how to reduce shrinkage will help to keep employees informed of the latest theft prevention methods.

Require persons check in when arriving or leaving the warehouse

Concealment of goods, altering or swapping price tags, and transferring merchandise from one container to another are common Shoplifter methods. Require customers to show a valid ID for every return and exchange. Depending on the size of your store, the number of employees you have can be a deterrent to thieves. It’s essential to have an employee on each register, one or two on the shop floor, and security guards. While you need more inventory on the shop floor to sell more, stacks and vertical displays may cause obstructed views.

But not many people like working in an environment where their colleagues are engaged in illegal behavior, either—behavior that damages the employer and opens up other parties to liability. An effective way to combat this behavior is to provide employees with an anonymous way to report any theft, scamming, or suspicious behavior in the warehouse. Anonymity is key, as it allows employees who would otherwise hesitate to come forward and share information.

Create a shrinkage prevention plan for your store

This is yet another way for warehouse managers to get a feel for who is coming in and out and spot any irregularities that could indicate theft. To avoid employees feeling unwelcome Inventory Shrinkage in Retail: 4 Tips to Prevent It or untrusted, many retailers opt to make check-in/check-out optional . Brigitte is a retail specialist and staff writer with brick-and-mortar management experience.

Shoplifting occurs when a customer exits a store with more than what they paid for at the cashier. Shoplifting accounts for 38% of inventory shrinkage, and it surpassed employee theft as the leading cause of shrinkage in the 2016 National Retail Security Survey. Even as stores increase security through the use of CCTV cameras, digital tags, and other means, some customers still manage to steal inventory. So why is shrinkage a key area of concern, particularly for loss prevention professionals in retail? The answer becomes quite clear when recognising that stock, or inventory, is typically the largest current asset for retailers .

Inventory Shrinkage Guide for Small Businesses (+ Calculator)

Whether you’re concerned about employee theft, shoplifting, or both, adding video surveillance could discourage inventory theft. Barcodes and QR codes are all you need to track inventory quickly, RFID technology can help reduce the risk of shoplifting. That’s because RFID tags allow businesses to keep an eye on inventory as it moves around the store—and can even trigger an alarm when exiting the premises. Inventory shrinkage can take place when items, such as expired produce, are naturally no longer sellable.

The company should contact the references and past employers to know the behavior and general conduct of a prospective employee. Familiarize them with the processes to be reviewed, and inform them of all the skills they’ll learn by training’s end.

Furthermore, should an employee be terminated or quit, you can easily remove access privileges from their credentials, even if they neglect to turn them in. This is much easier to do than having to change locks every time you https://business-accounting.net/ let go of an employee. An access control system allows you to limit who has access to areas and materials and puts limits on that capability. A tried and true method for decreasing theft and criminal activity is surveillance.

  • With an employee management software, like Connecteam, employees no longer have to carry around heavy binders filled with paper forms, checklists, and reports.
  • Typically, its significant effect is only realized after an extended period of time has gone by.
  • However, there’s another way to determine if a cashier is stealing.
  • For example, assume that company ABC owns $100,000 of inventory recorded in its accounting books for a specific accounting period.
  • Automated inventory management solutions allow you to track products and identify expiring inventory — all of which help you limit inventory shrinkage.
  • Learn about the four main causes of inventory shrinkage and find out what you can do to prevent them.

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